EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
*hb1028*
HOUSE BILL 1028
P6 5lr2376
CF SB 810
By: Delegate Forbes (Chair, Joint Committee on Pensions)
Introduced and read first time: February 3, 2025
Assigned to: Appropriations
A BILL ENTITLED
AN ACT concerning 1
Board of Trustees for the State Retirement and Pension System – Investment 2
Division – Compensation and Staffing Committee 3
FOR the purpose of repealing the Objective Criteria Committee of the Board of Trustees 4
for the State Retirement and Pension System and establishing a Compensation and 5
Staffing Committee of the Board of Trustees; providing for the membership of the 6
Committee; clarifying the Board of Trustees’ authority to determine the 7
qualifications and compensation of and the type and number of positions necessary 8
for carrying out the professional investment functions of the Investment Division of 9
the State Retirement Agency; requiring the Committee to make certain 10
recommendations to the Board of Trustees regarding the objective criteria to be used 11
in setting compensation and awarding financial incentives to certain employees in 12
the Investment Division; requiring the Board of Trustees to consider certain 13
recommendations of the Committee; clarifying the requirements for the Board of 14
Trustees to enter into an agreement with a consultant to provide certain services to 15
the Committee; and generally relating to the operations of the Board of Trustees for 16
the State Retirement and Pension System. 17
BY repealing and reenacting, with amendments, 18
Article – State Personnel and Pensions 19
Section 21–108(b), 21–118.1(a), (b), and (d)(1)(i), and 21–122(f) and (g) 20
Annotated Code of Maryland 21
(2024 Replacement Volume and 2024 Supplement) 22
BY repealing and reenacting, without amendments, 23
Article – State Personnel and Pensions 24
Section 21–122(a)(1) through (3) 25
Annotated Code of Maryland 26
(2024 Replacement Volume and 2024 Supplement) 27
2 HOUSE BILL 1028
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 1
That the Laws of Maryland read as follows: 2
Article – State Personnel and Pensions 3
21–108. 4
(b) In addition to the Investment Committee established under § 21–114 of this 5
subtitle AND THE COMPENSATION AND STAFFING COMMITTEE ESTABLISHED UNDER 6
§ 21–122 OF THIS SUBTITL E, the Board of Trustees may establish other committees. 7
21–118.1. 8
(a) Notwithstanding any other provision of law, on the recommendation of the 9
Executive Director and the [Investment] COMPENSATION AND STAFFING Committee, 10
the Board of Trustees shall determine the qualifications and appointment, as well as 11
compensation and leave, for the Chief Investment Officer who shall be the head of the 12
Investment Division. 13
(b) (1) In making determinations and appointments under this section, the 14
Executive Director and the [Investment] COMPENSATION AND STAFFING Committee 15
shall consider the comparative qualifications, compensation, and leave of employees 16
serving in similar positions and discharging similar duties at comparable public pension 17
funds. 18
(2) (i) 1. The Board of Trustees shall adopt objective criteria for 19
setting the qualifications and compensation of the Chief Investment Officer. 20
2. The Board shall consider the recommendations of the 21
[Objective Criteria] COMPENSATION AND STAFFING Committee under § 21–122(g) of 22
this subtitle before adopting objective criteria for setting compensation. 23
(ii) The criteria adopted under subparagraph (i) of this paragraph 24
shall include objective benchmarks of investment performance that shall be met or 25
exceeded for the Chief Investment Officer to be eligible for an increase in compensation. 26
(iii) The Board may not grant any increases in compensation to the 27
Chief Investment Officer in a fiscal year in which State employees are subject to a furlough. 28
(iv) The Chief Investment Officer’s compensation may not be 29
adjusted in accordance with cost–of–living adjustments and merit increases available to 30
State employees. 31
(d) (1) (i) 1. On the recommendation of the [Investment] 32
COMPENSATION AND STAFFING Committee, the Board of Trustees shall establish 33
objective criteria for awarding financial incentives to the Chief Investment Officer. 34 HOUSE BILL 1028 3
2. The Board shall consider the recommendations of the 1
[Objective Criteria] COMPENSATION AND STAFFING Committee under § 21–122(g) of 2
this subtitle before adopting objective criteria for awarding financial incentives. 3
21–122. 4
(a) (1) There is an Investment Division in the State Retirement Agency. 5
(2) Subject to subsection (f) of this section, the Board of Trustees shall 6
determine the qualifications and compensation for positions within the Investment 7
Division. 8
(3) The Board of Trustees: 9
(i) may determine and create the type and number of positions 10
necessary for carrying out the professional investment functions of the Investment 11
Division; and 12
(ii) shall adopt objective criteria to be followed when exercising its 13
authority under item (i) of this paragraph and paragraph (2) of this subsection. 14
(f) (1) (i) 1. The Board of Trustees shall adopt objective criteria for 15
setting the qualifications and compensation of positions under subsection (a) of this section. 16
2. The Board shall consider the recommendations of the 17
[Objective Criteria] COMPENSATION AND STAFFING Committee under subsection (g) of 18
this section before adopting objective criteria for setting compensation. 19
(ii) The criteria adopted under subparagraph (i) of this paragraph 20
shall include: 21
1. consideration of the comparative qualifications and 22
compensation of employees serving in similar positions and discharging similar duties at 23
comparable public pension funds; 24
2. limitations on the amount by which the compensation for 25
a position may be increased each fiscal year, not to exceed 10%; and 26
3. objective benchmarks of investment performance that 27
shall be met or exceeded by an individual to be eligible for an increase in compensation. 28
(iii) The Board of Trustees may not grant any increases in 29
compensation in a fiscal year in which State employees are subject to a furlough. 30
4 HOUSE BILL 1028
(iv) For positions that do not involve discretion over 1
investment–related decisions, the Board of Trustees may not set compensation that exceeds 2
compensation for providing comparable services in other State employment. 3
(v) Except for positions under subparagraph (iv) of this paragraph, 4
the compensation of an employee may not be adjusted in accordance with cost–of–living 5
adjustments and merit increases available to State employees. 6
(VI) BASED ON THE RECOMMEN DATIONS OF THE 7
COMPENSATION AND STAFFING COMMITTEE UNDER SUBSE CTION (G) OF THIS 8
SECTION, THE BOARD OF TRUSTEES SHALL APPROV E: 9
1. THE TYPE AND NUMBER OF POSITIONS IN THE 10
INVESTMENT DIVISION; 11
2. THE QUALIFICATIONS F OR EACH POSITION IN THE 12
INVESTMENT DIVISION, AS APPROVED UNDER IT EM 1 OF THIS SUBPARAGRAPH ; AND 13
3. ANY COMPENSATION AND FINANCIAL INCENTIVES 14
FOR THE CHIEF INVESTMENT OFFICER AND INVESTMENT DIVISION STAFF, 15
INCLUDING SALARY INC REASES OR DECREASES RECOMMENDED FOR THE CHIEF 16
INVESTMENT OFFICER AND EMPLOYEES O F THE INVESTMENT DIVISION. 17
(2) (i) 1. The Board of Trustees shall adopt objective criteria for 18
awarding financial incentives under subsection (a) of this section. 19
2. The Board shall consider the recommendations of the 20
[Objective Criteria] COMPENSATION AND STAFFING Committee under subsection (g) of 21
this section before adopting objective criteria for awarding financial incentives. 22
(ii) Financial incentives may only be awarded based on the objective 23
criteria adopted in accordance with subparagraph (i) of this paragraph. 24
(iii) The criteria adopted under subparagraph (i) of this paragraph 25
shall include: 26
1. limitations on the amount of financial incentives for a 27
position in a fiscal year, not to exceed 33% of a position’s compensation, exclusive of 28
financial incentives; and 29
2. objective benchmarks of investment performance that 30
shall be met or exceeded by an individual to be eligible for financial incentives, including 31
benchmarks for the asset class in which investments are under the direction of the 32
individual. 33
HOUSE BILL 1028 5
(iv) 1. Any financial incentives paid shall be paid over multiple 1
fiscal years in equal installments. 2
2. The dates on which financial incentives awarded under 3
this section shall be paid shall be set by the Board of Trustees at the time the financial 4
incentives are determined. 5
3. The dates set under subsubparagraph 2 of this 6
subparagraph may not be changed after being set. 7
(v) Except as provided in subparagraph (vi) of this paragraph, if an 8
individual who has earned financial incentives separates from employment in the 9
Investment Division, the Board of Trustees may not pay out any remaining financial 10
incentives due to be paid after the date of separation from employment. 11
(vi) The Board of Trustees may pay any remaining earned financial 12
incentives after the date of separation from employment if the individual retires directly 13
from the Investment Division on or 30 days after the date of separation. 14
(vii) The Board of Trustees may not award financial incentives for 15
positions that do not involve discretion over investment–related decisions. 16
(viii) 1. The Board of Trustees may not pay out financial 17
incentives in a fiscal year in which State employees are subject to a furlough. 18
2. The Board of Trustees shall pay out any financial 19
incentives not paid to an individual in accordance with subsubparagraph 1 of this 20
subparagraph only: 21
A. after the furlough period has ended; and 22
B. if the individual is currently employed in the Investment 23
Division. 24
(3) (i) On or before October 1 each year, the Board of Trustees shall 25
submit to the Senate Budget and Taxation Committee, the House Appropriations 26
Committee, and the Joint Committee on Pensions, in accordance with § 2–1257 of the State 27
Government Article, a copy of the most recent criteria adopted under this subsection, 28
INCLUDING ANY CHANGE S TO COMPENSATION AN D INCENTIVES FOR THE CHIEF 29
INVESTMENT OFFICER AND INVESTMENT DIVISION STAFF. 30
(ii) In addition to the report required under subparagraph (i) of this 31
paragraph, the Board of Trustees shall submit, within 30 days of adoption by the Board of 32
Trustees, a copy of any changes adopted to the criteria established under this subsection to 33
the Senate Budget and Taxation Committee, the House Appropriations Committee, and the 34
Joint Committee on Pensions, in accordance with § 2–1257 of the State Government Article. 35
6 HOUSE BILL 1028
(4) On or before October 1, January 1, March 1, and July 1 each year, the 1
Board of Trustees shall submit to the Senate Budget and Taxation Committee, the House 2
Appropriations Committee, and the Joint Committee on Pensions, in accordance with § 3
2–1257 of the State Government Article, a report on system investment returns for the 4
preceding fiscal quarter, including: 5
(i) investment performance by asset class, including performance 6
relative to asset class benchmarks; and 7
(ii) investment performance of assets under the direction of each 8
Investment Division employee. 9
(g) (1) There is [an Objective Criteria] A COMPENSATION A ND STAFFING 10
Committee of the Board of Trustees. 11
(2) (I) The [Committee consists of the] following members SHALL BE 12
INCLUDED ON THE COMMITTEE: 13
[(i) one member of the Senate of Maryland serving on the Joint 14
Committee on Pensions, appointed by the President of the Senate; 15
(ii) one member of the House of Delegates serving on the Joint 16
Committee on Pensions, appointed by the Speaker of the House; 17
(iii) the State Treasurer or the State Treasurer’s designee; 18
(iv)] 1. the Secretary of Budget and Management or the 19
Secretary’s designee; 20
[(v)] 2. one [member] OR MORE MEMBERS of the Board of 21
Trustees under § 21–104(a)(4)(i), (ii), (iii), (iv), or (v) of this subtitle, appointed by the 22
Chairman of the Board of Trustees; AND 23
[(vi)] 3. one [member] OR MORE MEMBERS of the Board of 24
Trustees under § 21–104(a)(4)(viii) of this subtitle, appointed by the Chairman of the Board 25
of Trustees[; and 26
(vii) a member of the public with financial industry experience, 27
appointed jointly by the presiding officers of the General Assembly]. 28
(II) THE FOLLOWING MEMBERS MAY BE APPOINTED TO THE 29
COMMITTEE BY THE CHAIRMAN OF THE BOARD OF TRUSTEES: 30
1. THE STATE TREASURER, OR THE STATE 31
TREASURER’S DESIGNEE; AND 32
HOUSE BILL 1028 7
2. THE COMPTROLLER , OR THE COMPTROLLER ’S 1
DESIGNEE. 2
(3) (i) The Chairman of the Board of Trustees shall appoint the Chair 3
of the Committee. 4
(ii) The Chairman of the Board of Trustees may not serve as the 5
Chair of the Committee. 6
(4) [On or before December 31, 2018, and at least once every 5 years 7
thereafter, the] THE Committee shall make recommendations to the Board of Trustees 8
regarding: 9
(i) objective criteria under § 21–118.1(b)(2) and (d) of this subtitle 10
for the compensation and financial incentives for the Chief Investment Officer; and 11
(ii) objective criteria under subsections (a) and (f) of this section for 12
the compensation and financial incentives for the positions in the Investment Division. 13
(5) (i) The Board of Trustees shall enter into an agreement with a 14
consultant to assist the Committee AND THE BOARD regarding objective criteria under 15
this subsection AND THE BOARD’S RESPONSIBILITIES F OR COMPENSATION AND 16
STAFFING. 17
(ii) The Board of Trustees may not enter into an agreement with a 18
consultant under subparagraph (i) of this paragraph if that consultant is actively providing 19
consulting services for the Board of Trustees [and] OR the staff of the Investment Division. 20
(III) THE CHIEF INVESTMENT OFFICER MAY NOT SEPAR ATELY 21
RETAIN THE CONSULTAN T HIRED UNDER SUBPAR AGRAPH (I) OF THIS PARAGRAPH 22
FOR ANY SERVICES . 23
(6) (i) The [Chief Investment Officer] EXECUTIVE DIRECTOR shall 24
serve in an advisory capacity to the Committee REGARDING COMPENSATI ON AND 25
INCENTIVE COMPENSATI ON FOR THE CHIEF INVESTMENT OFFICER AND 26
INVESTMENT DIVISION STAFF. 27
(ii) The Chief Investment Officer may not participate in any 28
deliberations regarding the criteria for compensation and financial incentives for the Chief 29
Investment Officer OR INVESTMENT DIVISION STAFF. 30
(III) THE CHIEF INVESTMENT OFFICER SHALL SERVE I N AN 31
ADVISORY CAPACITY RE GARDING THE TYPE OF , NUMBER OF, AND QUALIFICATIONS 32
FOR POSITIONS IN THE INVESTMENT DIVISION. 33
8 HOUSE BILL 1028
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect July 1
1, 2025. 2